Being CEO at Vonage better than consulting…

Last week, Vonage (VG) named Cingular marketing executive Marc Lefar as its new CEO. Lefar had left Cingular in April 2007, just before the company was renamed AT&T Wireless and had been doing consulting work for his own firm, Marketing Insights, which doesn’t appear to have been all that active, other than for a few speeches. Or, maybe it was just in stealth form. Still, Vonage is paying handsomely for Lefar’s talents.

Yesterday, Vonage filed Lefar’s employment agreement and it shows that being CEO — even CEO of a struggling company — is better than hunting around for consulting work. In addition to an $850K salary — a significant increase over the $600K that co-founder Jeffrey Citron had been making as interim CEO — Lefar will also get an addition $865K “to compensate the Executive for early termination of his prior business affairs”.

But perhaps the biggest goodie is the 6.5 million options, which are priced at $1.49. It’s not just the amount that’s eye-opening here. It’s also the fact that the terms are some of the most generous I’ve seen in quite some time. And, if things don’t work out and Lefar decides to leave for “good reason”, he can get another pot of options with terms that require advanced math (or at least legal skills) to figure out.

There’s also up to an additional $250K plus the cost of commercial air travel to cover Lefar’s travels between his home in the Atlanta area and Vonage’s offices in New Jersey. That goes up to $350K next year and doesn’t include the requisite gross-up. Throw in another $50K for the lawyers who negotiated Lefar’s contract. And an “additional bonus” if Vonage is sold within the next year.

Given Vonage’s sagging price and the hefty price the company is paying for this new talent, Vonage shareholders better hope that there’s more than hype here. Judging by the steady decline since Vonage went public in May 2006, it’s not clear how much more they can take.